Russia searches for India

The countries are far away, but both are trying to find solutions for gas, which is becoming a significant energy source for India

India is a country of more than 1.2 billion people, fourth in the world in terms of energy consumption. Until not long ago, the primary energy source in this region was coal, which is now losing ground to other sources, including renewables. As regards gas, this enormous country consumes roughly only 56 billion cubic meters per year: less than Italy. If we consider the fact that 35-36 billion cubic meters are produced internally, it is easy to see why imports account for such a small slice of the pie. The point is that India would like to import more gas, as it is a better and certainly cleaner energy source than coal and oil. However, due to its geographical location, liquefied natural gas (LNG) is the only fuel that can access the country. The largest gas resources - as is well-known - are located in Russia, but there are no shared borders. Therefore, for a few years now Russia and India have sought out solutions to enable the former to sell gas to the latter.

Possible roads from Moscow to New Delhi

For example, recently, in October 2016, Gazprom and Engineers India signed an MoU to study the possible paths that could bring Russian gas to the Asian giant. They even considered building a gas pipeline, a link that would depart from the one running to China, called the ''Power of Siberia 2,'' but in this case it would be the longest gas pipeline in the world, at 6,000 kilometers, and have extremely high costs estimated at around $25 billion. Although this possibility remains on the table, it is difficult to believe that it would be an easy solution to implement given current oil and gas prices. Another solution would be to bring LNG from Sakhalin, and that is what Gazprom is already doing. But the volumes are negligible. In 2012, Gazprom signed a contract with the Indian GAIL for the supply for over 20 years of 2.5 million tons of LNG per year from the Shtokman field but, as we know, its development has been suspended. At the moment, Gazprom could guarantee the supply of Yamal LNG in 2017, but also in this case it is only a small volume, while Gazprom would certainly like to have a more significant presence. Therefore, the possibility of replacement supplies via China and Myanmar would be the best solution. ''Myanmar sells gas to China through an existing gas pipeline. If Russia can provide equivalent gas to China, then we can invert the flow of gas from Myanmar to China and bring the gas to India,'' stated Narendra K. Verma, managing director of ONGC Videsh Ltd (OVL) on the sidelines of the Petrotech conference on December 7. He also added that he had spoken with Gazprom about this alternative swap, by means of which Russia would supply gas to China and in exchange China would send the same amount of gas from Myanmar to India. ''This is why we need a gas pipeline that runs from Myanmar to India,'' Verma noted. The gas pipeline would be much shorter and economically feasible than that which would run from Siberia to India. Clearly, this solution is also appealing for Russia, but many more meetings and more collaboration would be required between China and Myanmar. And it is not yet clear whether China would want to collaborate in this project, as at the moment the Asian superpower is seeking to attract all available volumes of gas to fuel its own economy. Indeed, the spokesman of China’s Ministry of Foreign Affairs, Lu Kang, refused to explain the Chinese position: ''I know of this. But I am not familiar with the details,'' he told journalists who questioned him on this issue, ''I suggest that you check with the other parties concerned, like Russia and Myanmar.''

The current energy mix in India

Seeking out fairer trade deals

Naturally, another point of discussion is the price. India is trying to purchase gas at a lower price, while the sellers, of course, want exactly the opposite. During the recent 5th IEF-IGU Ministerial Gas Forum, the Indian Minister of State for Petroleum, Dharmendra Pradhan, declared: ''If other LNG importing countries give India a hand, we will have more opportunities to reach fairer trade deals.'' In this regard, already in 2013 India and Japan established a multilateral group with the shared interest of purchasing natural gas at the lowest prices possible. Now, India wants to involve other area importers as well, such as China and Taiwan. It is clear that not only are the Russians interested in the promising Indian market: quite recently Petronas, the Malaysian state company, also announced that it would like to enter India with its own LNG. ''India has always been an important country for Petronas and for us it has very high potential in terms of partnerships and as a client. With decades of experience as an end-to-end LNG player, and currently the third largest LNG producer in the world, Petronas has the ideal background to become the main supplier of its clients in the LNG sector,'' stated Datuk Wan Zulkiflee Wan Ariffin, CEO of Petronas. And we should not overlook the Americans, who have started exporting their own LNG. Thus, in a short period of time, India could increase the natural gas component of its energy mix from 7 percent to 15 percent.